WITH ALL OF THE BAD economic news coming out these days, I wouldn’t be surprised if many readers are wondering if I am not being overly optimistic in my reports on the U.S. economic outlook. So, to provide a balanced view of the turbulent economic scene, let me sketch the more widely believed worst-case scenario. Then, I can honestly say, “I report, you decide.”
The economy is not merely slowing, it is heading towards recession. New home sales are 34 percent below year-earlier levels, as homes move from builder to buyer at the slowest pace in thirteen years. The market for existing homes is no better: sales are down 23 percent, and the inventory of unsold homes has resumed its rise after a brief fall. House prices are down about 10 percent, and are headed lower at an accelerating pace. Worse still, non-residential construction, until now holding its own, “is likely to decelerate sharply,” says Fed chairman Ben Bernanke.
